1. INTRODUCTION

The world is changing with a speed which

has never been seen before. The business

environment nowadays is characterised by

increasing complexity, uncertainty and

discontinuity. Changing market conditions,

intensifed global competition and

increasingly shorter product life cycles mean

that companies are having to re-examine the

traditional methods and strategies for doing

business (Bartlett & Ghoshal, 1987; Ohmae,

1989). Global competition is growing and

will continue to increase. According to the

competitiveness roadmap 2007-2050

(Garelli, 2007)1 among the main issues with

a high impact on world competitiveness

environment during the next three decades

are the following ones:

• Protectionism on the rise;

• Service and integration are key

competitiveness factors;

MARKET ENTRY STRATEGIES TO EMERGING MARKETS: A

CONCEPTUAL MODEL OF TURNKEY PROJECT DEVELOPMENT

Bistra Vassileva* and Miroslav Nikolov

Centre Innovation and Development (CID) at the University of Economics-Varna77 Knjaz Boris I Boul., Varna, Bulgaria

(Received 2 May 2016; accepted 4 July 2016)

Abstract

The main purpose of the paper is to analyse the international market entry strategies in the light

of globalisation processes and to propose a conceptual model of turnkey projects as market entry

mode. The specific research objectives are as follows: 1. to develop an integrated framework of the

turnkey marketing process as a conceptual model; 2. to analyse BRICS countries as potential host

countries for turnkey projects implementation; 3. to assess potential implications of proposed

conceptual model for global market entry decisions.

Keywords: international market entry strategies, turnkey projects, BRICS

* Corresponding author: bistravas@ue-varna.bg

S e r b i a n

J o u r n a l

o f

M a n a g e m e n t

Serbian Journal of Management 11 (2) (2016) 291 - 310

www.sjm06.com

DOI:10.5937/sjm11-10177

• Labour cost differences shrink;

• The technological divide disappears;

• China, India and Russia as

technological powers;

• Climate change affects economic

resources.

It is argued that protectionist reprisal will

increasingly confront acquisitions pursued

by some of emerging economies due to

perceptions of a potential loss of economic

power and national image. Protectionist

measures will include environmental

protection, corporate governance, social

protection or intellectual property. Emerging

economies, as an opposite reaction, will

significantly increase pressure to gain access

to decision-making in international

institutions by emphasising their

predominant economic weight and their

financial capabilities to fund such

institutions (Garelli, 2007).

The importance of market entry strategies

in internationalisation is widely recognised

in the international marketing literature

(Davidson, 1982; Ekeledo & Sivakumar,

2004; Gatignon & Anderson, 1988; Root,

1994; Terpstra & Sarathy, 1994). To facilitate

the adoption of an appropriate entry mode it

is necessary to have conceptual models that

are rooted in sound theories (Anderson &

Gatignon, 1986; Dunning, 1977). This paper

further investigates the pros and cons of

market entry modes in different categories of

country-markets. It discusses the project

marketing issues and especially turnkey

projects as market entry mode in emerging

markets (BRICS).

Following a synthesis of the international

marketing strategies literature and the

resource-based view toward international

market entry mode strategies, we describe

the research approach adopted in present

paper. Afterward, we provide the findings of

the research and develop a conceptual model

of turnkey projects as a market entry mode.

Finally, we discuss the implications of

turnkey projects as a market entry strategy to

emerging markets (BRICS).

In contributing to the literature at the

international market entry strategies, two

issues are investigated in the course of this

study: first, turnkey projects as market entry

strategy in emerging markets; and, second,

turnkey project marketing process.

2. GLOBALISATION AND MARKET

ENTRY STRATEGIES

2.1. Globalisation and global business

trends

Globalisation is a complex process that

has been at work, in various ways, and to

different degrees (Clark et al., 2009). It is

agreed that the debate around a consistent

definition for globalisation has emerged

from the field of international business. The

definitional void stems from the fact that the

word ‘global’ has been used in a variety of

often contradictory ways (Clark & Knowles,

2003). Scholars from different scientific

fields focus on different aspects of

globalisation that are relevant to their own

disciplinary interests which neglects the fact

that globalisation is a complex phenomena.

Three common factors are identified by

Clark and Knowles (2003) in most

conceptualisations of globalisation: (1)

integration of national/ regional phenomena

into world sub-systems; (2) the process(es)

by which this integration occurs; and (3)

mechanisms that facilitate integration, by

transmitting influence from one location to

another. Inter-connectedness and

interdependence comprise the very core of

292 B.Vassileva / SJM 11 (2) (2016) 291 - 310

1The „Competitiveness Roadmap” is an attempt to describe and assess the main issues that will affect the world competitiveness landscape.

Issues are shown along two axes, degree of impact and time-scale. It is a subjective assessment which aims to bring some coherence to the

multitude of issues that are said to be having an impact on the competitiveness landscape. The issues which are described are 45 with

different levels of impact.

these factors thus revealing the complex

nature of globalisation.

There is no doubt that globalisation is a

fact and that it will continue to affect

companies and their marketing activities

providing global market opportunities and/or

raising global competitive threats. Combined

with global market uncertainty, globalisation

can be considered to be a global business

driver (Table 1).

With the trend towards more

interdependence among nations, several

changes in the business environment have

emerged: converging consumer demand,

increasing trade and investment

liberalisation, emergence of global markets

for goods, services, labor and financial

capital (Thoumrungroje, 2004). Hence,

global markets became both a fundamental

research topic and hot business issue.

Global business changes impose a certain

level of transformation of both business

models and market dimensions (Figure 1).

The transfer process from one dimension

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Figure 1. Relationships “international – transnational – global” dimension

Source: Adapted by Ellis, J. and Williams, D. International Business

Strategy, Pitman Publishing, 1995, р. 339.

Table 1. Global business driversDriver Description

Globalisation Realignment of global supply chain

Economic shift from global North to South

Changing global governance

Elevated financial volatility and risk

More inclusive globalisation

Consumer behaviour New models of consumer engagement

The insatiable consumer

New era of squeezed profitability

Demographics War for talent Growing infrastructure needs

Regulation and activism

Changing role of government Rising geopolitical instability

Environment and natural resources

Depleting natural resources Responding to sustainability challenge

Technology New paradigms in product design and manufacturing

New and innovative R&D models

Source: Adapted by: Report of the Global Business Policy Council at A.T. Kearney

[available at: http://www.atkearney.com/gbpc/global-business-drivers]

to another or from one business model to

another depends on various internal and

external factors. In reality quite frequently

we can observe transition states with

overlapping business models (Figure 2).

Years of research done by the McKinsey

Global Institute (MGI) and McKinsey’s

Strategy Practice reveal three major

economic forces the global economy has

ever seen: the collision of technological

disruption, rapid emerging-markets growth,

and widespread aging. Much bigger shifts in

each of these areas are expected which will

tremendously affect economy, social life and

personal behaviour worldwide.

First, technology and connectivity have

disrupted industries and transformed the

lives of billions of people in their different

roles as workers, consumers and citizens.

The KPMG report on complexity (2011)

shows that technology is changing business

models, improving processes, and opening

new markets, but also creating volumes of

new data that must be managed, supported,

and secured. More transactions are taking

place across more borders. Changing global

regulatory environment is forcing businesses

to react to ensure compliance while

managing new risks. We are witnessing an

extraordinary growth in computing capacity,

power, and speed of ITC penetration2. This

acceleration in the scope, scale, and

economic impact of technology will be

supplemented with a new age of artificial

intelligence, consumer products and

services, instant communication, and

unlimited information which in turn will

distress the business in unthinkable way.

With instant information and

communication, virtually everything is

available to anyone, anywhere. Markets are

now global and many corporations are often

richer and more powerful than many

countries.

294 B.Vassileva / SJM 11 (2) (2016) 291 - 310

Research and Development; NPD – New product development

Source: Adapted by Ellis, J. and Williams, D. International Business Strategy,

Pitman Publishing, 1995, 324-325.

Figure 2. Basic forms of international business: differences by key characteristics

2According to the Moore‘s Law, the overall processing power for computers doubles every two years.

Second, the world’s economic center of

gravity has continued shifting from West to

East, with China being at the centre of the

trend. This shifting locus of economic

activity and dynamism to emerging markets

and to cities within those markets, will give

rise to a new class of global competitors both

companies and brands. The global urban

population is growing by 65 million a year,

and nearly half of global GDP growth

between 2010 and 2025 will come from 440

cities in emerging markets, 95% of them

being almost unknown small and medium-

sized cities in emerging markets. According

to the data provided by the Global Cities

Index and Emerging Cities Outlook3

(Kearney, 2014) there are six cities from Asia

in top 20 global cities and nine in top 20

emerging cities in 2014. Beijing is ranked in

top 20 by both indices. This shifting balance

of power has been indicated as a transition

from Globalisation 2.0 (Western-dominated)

to Globalisation 3.0 (China-dominated)

(Walker, 2007)4. Globalisation 3.0 is

characterised by the fact that the West no

longer dominates the world’s savings, and as

a result no longer dominates global

investment and finance. The erosion of

Western power is accompanied by the

erosion of the authority of the grand

institutions of Globalisation 2.0, which

sustained power by enforcing the implicit

rules of Western economic orthodoxy. This

situation is confirmed by the 2014 FDI

Confidence Index ranking and scores5. The

first and second place are occupied by

United States and China with maintained

ranking from 2013 (respectively 2.16 and

1.95 out of maximum 3.0)6.

Third, the rapid aging of the world’s

population will create a massive set of

economic pressure. Thebaby boomers have

begun retiring. Aging has been evident in

developed economies for few years, with

Japan and Russia seeing their populations

decline and the trend is spreading slowly to

China. It is expected that during the next few

years it will “reach” Latin America.

The researchers suggest that during the

collision of these three forces, the resulting

change will be so significant that much of the

management and marketing expertise, know-

how and intuition that have served in the past

will become irrelevant. Companies will face

with more discontinuity and volatility, with

long-term charts no longer looking like

smooth upward curves, with outdated long-

held assumptions, and useless formerly

powerful business models (Dobbs et al.,

2014).

2.2. Country classification systems

Over the years, researchers and

practitioners have debated country

classification issues (Nielsen, 2011). Several

classification systems have been developed

by international organisations and have been

widely recognised. The UNDP’s country

classification system is built around the

Human Development Index (HDI) launched

together with the Human Development

Report (HDR) in 1990. The classification

systems in the World Bank are developed

both for operational and analytical purposes.

The operational classification satisfies the

needs of the World Bank’s International

Bank for Reconstruction and Development

295B.Vassileva / SJM 11 (2) (2016) 291 - 310

3A.T. Kearney‘s Global Cities Index (GCI) examines a comprehensive list of 84 cities, measuring how globally engaged they are across

26 metrics in five dimensions: business activity, human capital, information exchange, cultural experience, and political engagement since

2008. Emerging Cities Outlook (ECO) complements the GCI.

4The exact moment of the shift is considered to be the accession to WTO membership of China on December 11, 2001.

5The Foreign Direct Investment Confidence Index®, established in 1998 by A.T. Kearney, ranks countries based on how changes in their

political, economic, and regulatory systems are likely to affect foreign direct investment inflows in the coming years.

6There are scholars (Dreher, 2006) who question the statistical significance of FDI Confidence Index since it covers only 67 countries,

there is no clear explanation about the weights and cultural factors are excluded. They propose KOF Index of Globalisation which measures

the three main dimensions of globalisation: economic, social and political, and includes sub-indices referring to: actual economic flows,

economic restrictions, data on information flows, data on personal contact and data on cultural proximity. An alternative perspective to

measuring globalisation from the perspective of nation-states can be found in UNCTAD’s “Transnationality Index” (TNI). Although

ostensibly a measure of how internationalised MNCs are, the TNI can also be construed as reflecting organisational responses to

globalisation.

(IBRD) which has a statutory obligation to

lend only to credit-worthy member

countries. That is why an objective criteria

are needed to assess the countries which

need a credit. Under this system, countries

that borrow from the IBRD and exceed a

certain income threshold engage in a process

that moves the country to non-borrowing

status. The analytical country classification

was constructed by the World Bank in 1978.

It has been modified in 1989 when the

countries were divided into categories based

on the income level.

Similar to the World Bank, the

classification systems in the International

Monetary Fund (IMF) are used for both

operational and analytical purposes. Several

analytical classifications have been

developed during the years starting from

1948. According to IMF (Abiad et al., 2012)

emerging market economies (EMs) and low-

income countries form a single category

which is named Emerging Market and

Developing Economies (EMDEs).

According to the criteria established by the

International Monetary Fund (IMF) an

emerging market is defined by a GDP-per-

capita ratio that ranges between 2000 USD

and 12000 USD.

2.3. Theoretical background of

international market entry strategies

A growing body of research in the area of

“firms’ behaviour on international markets”

emphasises on the process of internationali-

sation of the business and its determinants.

Numerous scholars tried to integrate the vast

amount of research in this field into coherent

topics (Aaby & Slater, 1989; Andersen,

1993; Johanson & Vahlne, 1992). However,

there is no agreement on a common

definition of the process of internationalisa-

tion in previous literature despite the scope

of theoretical and empirical work which has

been done during the years. Williamson

(1975) and Dunning (1988) consider interna-

tionalisation as a form of investment on

international markets. Johanson and Vahlne

(1977) suggested that internationalisation

should be observed as an evolutionary

process where firm activities on international

markets evolve in parallel with the following

two factors: stage of management/firm

involvement and market knowledge level.

Such a process is not always smooth and

sequential. Usually it integrates both internal

and external forms of activities (Welch &

Luostarinen, 1993). According to Coviello

and Mcauley (1999) the most comprehensive

and holistic definition on the process of

internationalisation is provided by Beamish

(1990) who describes it as “...the process by

which firms both increase their awareness of

the direct and indirect influence of

international transactions on their future, and

establish and conduct transactions with other

countries”. This definition presents a proper

context to synthesise the diverse theoretical

approaches toward internationalisation.

296 B.Vassileva / SJM 11 (2) (2016) 291 - 310

Table 2. The World Bank’s classification of countries

Type of countries Number GDP, USDPopulation,

million people

GDP per

person, USD

Low income countries 59 1 165 000 3094 380Lower middle income countries 69 1 635 000 1099 1490Upper middle income countries 42 2 135 000 498 4320High-income countries 39 19 304 000 834 23150

Source: TheWorldBank, EconomicReview, Vol. 11, 2000.

These approaches are summarised by

Johanson and Vahlne (1990) as follows: 1/

the FDI theory of internationalisation, 2/ the

stage model of internationalisation, and 3/

the network approach to internationalisation.

Table 3 provides a brief description of

predominant theories of internationalisation

process.

It has been suggested that organisational

capabilities provide the richest explanation

and prediction of entry mode choice in

foreign markets (Madhok,1997). However,

the application of the resource-based view to

international market entry mode strategies

has been primarily conceptual and

descriptive. Systematic empirical research

on entry mode choice, using the resource-

based perspective, is lacking despite the

recognition that firm-specific resources drive

successful business strategy (Ekeledo &

Sivakumar, 2004). Internalisation theory and

the transaction cost theory are viewed as the

same theory (Madhok, 1997; Rugman,

1980). Transaction cost theory strengthens

the theoretical bases of market entry modes

like sub-contracting, contract manufacturing,

franchising and licensing.

Abovementioned theories of internation-

alisation (Table 3) sometimes are indicated

as paradigms. The Uppsala internationalisa-

tion model forms the core of the geobusiness

paradigm since it comprises three groups of

variables (environmental, motivational and

country-market variables). The relational

paradigm has been developed by IMP

Group7 based on the background of the inter-

297B.Vassileva / SJM 11 (2) (2016) 291 - 310

Table 3. Theories of internationalisationTheory of

international

market entry

Key authors Short description

The Uppsala internationalisa-tion model

Johanson & Vahlne, 1977; 1992

Also known as a stage model because the internationalisation is viewed as a consequent development starting from geographically or culturally close markets and expanding further. Another version of the model suggests that firms should start with entry modes which require less commitment and resources thus lower level of risk.

Transaction cost theory

Williamson, 1981 The choice between full and particular internationalisation depends upon the costs and the benefits of sharing the resources relative to those of a wholly owned subsidiary.

Eclectic Theory Dunning, 1995; 2001

Internationalisation is considered to be a pattern of investment in foreign markets explained by rational economic analyses of ownership, location, and internalisation, so called OLI advantages.

The network approach

Johanson & Mattsson, 1995; Blankenburg, 1995; Håkansson & Snehota, 1995

The approach generally suggests that firms establish relationships and enter networks in order to access resources. The analysis is focused on networks of relationships between firms in the global market.

The resource-based theory

Aaker, 1989; Amit & Schoemaker, 1993; Barney, 1991; Bharadwaj et al., 1993; Conner, 1991; Grant, 1991

The firm-specific resources (assets and capabilities) are viewed as the drivers of a firm’s business strategy. It assumes sole ownership to be the default entry mode. This fundamental assumption of the resource-based approach is in sharp contrast with that of the transaction cost approach.

7International Marketing and Purchasing Group, http://www.impgroup.com/en/home/default.aspx

organisational theory (Reve & Stern, 1979;

Sweeney, 1972; Van de Ven et al., 1974) and

the theory of markets as hierarchies (Teece,

1983; Williamson, 1975). The paradigm

“markets–networks” also focuses on

relationships but within the boundaries of

marketing system and networks of relations8.

Within the framework of marketing system9

firms are observed as interdependent entities

and their activities being coordinated

through inter-relationships between the firms

of the network. The paradigm “systems-

exchanges” (Figure 3) includes part of the

elements of previously presented paradigms.

The emphasis is placed on intra-

relationships between institutions within the

system which is explained as a set of

regularly interacting groups which are

coordinated to allow a formation of united

whole and are organised to be able to fulfill

previously defined goals (Carman, 1980). To

overcome the challenges and to exploit the

opportunities of global markets companies

typically adopt one of the strategies

presented in Table 4.

These strategies require adoption of

different market entry modes. The impact of

a firm’s home country or host country on

choice of entry mode is extensively covered

in international business texts (such as Root,

1994; Terpstra & Sarathy, 1994; Douglas &

Craig, 1995). Entry mode literature focuses

on control because it is the most important

determinant of risk and return (Anderson &

Gatignon, 1986). Control refers to the level

of authority a firm may exercise over

systems, methods, and decisions of the

foreign affiliate (Ekeledo & Sivakumar,

2004). The specific choice depends on the

firm’s resources, the market experience of

the firm on the market, and the potential size

of the market. Scholars (Bradley, 2005; Root,

1994) have proposed three broad categories

of global market entry strategies which

include:

• Export, import, and countertrade

being the lowest level of entry (lowest level

of management involvement) with limited

control;

• Contractual entry strategies

(franchising, licensing, management

contracts and turnkey projects);

298 B.Vassileva / SJM 11 (2) (2016) 291 - 310

8This paradigm is presented in details for the first time from Johanson, J. and Mattsson, L.G. (1986). International marketing and inter-

nationalization process – a network approach, in Peter Turnbull and Stanley Paliwoda (eds.) Research in International Marketing, Croom

Helm, London, pp. 242-243.

9More details about theoretical school of marketing systems could be found in: Alderson, W. (1965).Dynamic Marketing Behavior: A

Functionalist Theory of Marketing, Homewood, Illinois, Richard D. Irwin.

Source: Adapted by Carman, J.M. (1980), “Paradigms for Marketing Theory”, Review

in Marketing, No. 3, p. 4.

Figure 3. Paradigm „systems-exchanges”

• Investment entry strategies (wholly

owned subsidiaries, joined ventures, M&A,

strategic alliances).

Turnkey projects are a type of

collaborative arrangement in which a firm

handles all operations and details for the host

country client, mainly by building complete,

ready-to-operate facilities. Turnkey

operations as a market entry mode are

suitable where the know-how is required to

assemble and run a technologically complex

process and/or when there are regulations

preventing FDI. They are less risky than

investment strategies which is a typical

feature for all contractual market entry

modes. Turnkey projects could be considered

as a specific type of project marketing as

well. From a marketing perspective project

“is a complex transaction concerning a

package of products, services and works,

designed specially to realise in a certain

period of time a specific asset for a client”

(Cova & Holstius, 1993). Thus turnkey

projects could be characterised through the

D–U–C model (Mandják & Veres, 1998)

which positioned the discontinuity, the

uniqueness and the complexity of each

project as specific dimensions of project

activities. Economic discontinuity of project

business places the supplier in a fragile and

even risky position because of the higher

bargaining power of customers. In order to

overcome this shortcoming it is advisable to

find possibilities to recreate continuity

especially with significant customers and

actors through the network of relations

(Cova & Salle, 2007).

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Table 4. Generic strategies to global marketsSuitable when level of

Type of

strategy Description Examples

flexibility global

efficiency

Home replication strategy

Direct transfer of company’s competitive advantage from the home market to the foreign market

BMW, Audi, Mercedes Benz, Toy’s R Us

Low Low

Multidomestic strategy

A company that operates with relatively free subsidiaries in each host market or customises its marketing campaigns, products and other operational techniques in a situation of high cultural differences.

Unilever, Kraft High Low

Global Strategy

Production of standardised products and services to achieve a very high level of economies of scale, standardised marketing campaigns and standardised distribution system.

Sony, Coca-cola Low High

Transnational Strategy

A balanced decentralised approach trying to combine the advantages of global strategy (economies of scale) and multidomestic strategy (decentralised decision making process).

IKEA High High

Source: Adapted by Lymbersky, C. (2008). Market Entry Strategies: Text, Cases and Readings in Market Entry Management,

1st edition, Management Laboratory Press, p. 29

3. METHODOLOGY AND FINDINGS

3.1. Methodology

3.1.1. Research purpose andobjectives

The main purpose of the paper is to

analyse the international market entry

strategies in the light of globalisation

processes and to propose a conceptual model

of turnkey projects as market entry mode.

The specific research objectives are as

follows: 1/ to develop an integrated

framework of the turnkey marketing process

as a conceptual model; 2/ to analyse BRICS

countries as potential host countries for

turnkey projects implementation; 3/ to assess

potential implications of proposed

conceptual model for global market entry

decisions.

3.1.2. Research methods and techniques

The paper is conceptual by its nature.

Detailed literature review on the key topics

of globalisation and internationalisation has

been performed. A special attention was

given to global market entry strategies.

Additionally, several in-depth interviews

with experts in international project business

and international complex projects

implementation have been conducted. The

interviews were audiotaped and trascripted

afterwards. Based on achieved results a

conceptual model was developed. An

analysis of secondary data (as a part of

feasibility analysis) for BRICS countries was

done as well.

3.1.3. Conceptual model

According to the last developments of the

definition of project activities presented by

researchers in the field of project business it

is the firm and not the project which is the

unit of pertinent analysis (Artto & Wikstrom,

2005). That is why, the investor is the focal

element in our conceptual model (Figure 4).

Project markets are characterised by the

intervention of numerous business and non-

business actors (Hadjikhani & Thilenius,

2005) throughout the whole project cycle.

For example, starting from the very

beginning of the turnkey project

development the investor could be a

government or an international

organisation/institution (both non-business

actors). Following the project cycle,

financing is one of the most critical elements

for turnkey project success. International

money lenders are non-business actors as

well (Welch, 2005). When different actors

from different countries (and international

organisations as well) are involved it is vital

to identify and analyse these actors, their

roles and inter-relations, and their influences,

respectively their power.

First, the investor is confronted with its

strategic priorities in terms of strategic

objectives and the type of its project idea

which could be perceived as a complexity.

According to Cova and Salle (2007) there are

two possibilities to deal with the complexity

of the situation. The first one is to follow the

determinist approach by considering the

complexity as a fact and to try to adapt to it.

The second one is the constructivist

approach which suggests that the complexity

could be reduced by becoming an actor in the

construction of the project. In both cases

information is needed in order to find

potential suppliers of engineering services.

Second, feasibility analysis comprises an

important step in the process of turnkey

project implementation as a market entry

mode. The focus usually is placed on risk

300 B.Vassileva / SJM 11 (2) (2016) 291 - 310

analysis and various barriers, incl. tariff and

non-tariff barriers. This is extremely critical

for emerging markets especially if there are

restrictive regulations on foreign entries. The

investor usually evaluates the overall

reliability of the feasibility study and takes a

decision to proceed or to cancel the project.

The key success factors of turnkey project

301B.Vassileva / SJM 11 (2) (2016) 291 - 310

Figure 4. Conceptual model of turnkey project development

development during the third stage of the

process – tender procedure, are numerous

but the most important are the financial

factors, risk factors and human factor.

Capacity to make special financial

arrangements and to follow these

arrangements during the project

implementation is crucial during the whole

process. Risk management should be an

integral part of each step of the process.

Competencies of the personnel are vital for

project sustainability.

3.2. Findings

3.2.1. Intervention areas in globalmarkets

Intervention areas in global markets are

analysed using secondary data provided by

the Globalisation Index Report and The

Global Competitiveness Report. Available

relations and their type were tested through

regression analysis (Table 5).

Based on received results we can identify

three main areas for marketing interventions

in global markets, namely financial

efficiency, HR skills and business

environment. The three of them were

mentioned as important for turnkey project

development. Business environment

interventions could be implemented by

affecting country risk levels, infrastructure

and security of international property. The

second one, infrastructure, is particularly

interesting because turnkey projects are

usually used to develop and to implement

infrastructure projects. Business

environment is considered a critical factor

during the process of market entry selection

and implementation. That is why, its analysis

(in different aspects and scopes) is done

through the whole process of turnkey project

development (Figure 4). The correlation

analysis reveals the strongest relationship

(Pearson coefficient 0.607, α = 0.000) of the

effect of financial efficiency over total

assessment of global competitiveness. It

302 B.Vassileva / SJM 11 (2) (2016) 291 - 310

Note: In the above table only statistically significant relations between analysed variables are presented. Information about all tested

relations could be received by the author under request. The significance values for the coefficients in regression equations in cases when

α >0.05 is shown in brackets.

Secondary data sources: A.T. Kearney: Foreign Policy Globalization Index 2011 Report and World Economic Forum: The Global

Competitiveness Report 2011-2012.

Dependent variable Independent variable Type of

relationship Coefficients Significance

Financial efficiency Labour expenditures/ wages

Linear R2 = 0.993

a = 0.266 b = 0.416

0.000

HR skills Relevant experience Linear R2 = 0.923

a = 0.747 b = 0.403

0.000

Business environment Country risk Linear R2 = 0.931

a = 0.139 b = 0.462

0.000

Business environment Infrastructure Linear R2 = 0.751

a = 0.016 b = 1.269 (0.911)

0.000

Business environment Security of intellectual property

Logarithmic R2 = 0.692

a = 2.585 b = 1.137

0.000

Table 5. Regression analysis, global markets

confirms the authors’ observations on

secondary sources of information that the

most frequent interventions on global

markets are performed through financial

tools.

3.2.2. Analysis of BRICS countries aspotential host countries for turnkey projectsimplementation

Present paper focuses on BRICS10

countries as the most popular emerging

markets. For the purposes of analysis several

secondary sources of information are used.

Countries are comparatively analysed based

on the composite elements of the KOF Index

of Globalisation, namely economic

globalisation, actual flow restrictions, social

globalisation, personal contact, information

flows, cultural proximity, political

globalisation, and the overall globalisation

index itself. The results are presented on

Figure 5through Figure 10. There is a strong

positive tendency toward globalisation for

BRICS countries (Figure 5).

As we can see in Figure 6 through Figure

10 there are obvious differences in the

structure of the globalisation process

between the countries, especially for the

elements “personal contact” and “cultural

303B.Vassileva / SJM 11 (2) (2016) 291 - 310

10Brasil, Russia, India, China and South Africa

Figure 6. KOF Index of Globalisation for China,1971 – 2011

Figure 5. Comparison of BRICS by Overall Globalisation Index (KOF Index of Globalisation), 1971– 2011

Note: Data are not available for Russia from 1971 to 1989

Source: Data set from http://globalization.kof.ethz.ch/ [last visited on 29.03.2015]

Figure 7. KOF Index of Globalisation forRussian Federation, 1990 – 2011

proximity”. Two “jumps” in cultural

proximity (1989 and 1997) are evident for

China (Figure 6). Personal contact still

remains at a low level with values quite

similar to those of India (Figure 9). These

factors are analysed further in details

because they are considered critical for the

third stage of turnkey project development –

tender procedure.

Russian Federation is an interesting and

challenging market because of its instability.

As we can see in Figure 7 there is a serious

“leap” in cultural proximity in 1998. During

the last two years few negative trends are

observed. There is a slight decline in

information flows, actual flows and

restrictions. As it was mentioned in the

introductory part of the paper, protectionism

is on the rise nowadays which causes

problems especially for investment and

contractual market entry strategies.

There is a group of scholars and

researchers (Distler, 2005; Laudicina, 2012)

who suggest that the locus of global

economic, political and demographic power

has been shifting with growing intensity

304 B.Vassileva / SJM 11 (2) (2016) 291 - 310

Figure 10. KOF Index of Globalisation for South Africa, 1971 – 2011

Note: Data are not available for Russia from 1971 to 1989

Source: Data set from http://globalization.kof.ethz.ch/ [last visited on 29.03.2015]

Legend

Figure 8. KOF Index of Globalisation for Brazil,1971 – 2011

Figure 9. KOF Index of Globalisation for India,1971 – 2011

from Global North (developed countries) to

Global South (developing countries) as well.

Both trends affect global supply chains

decisions, especially their sourcing locations

as well as expansion strategies of the

companies. Brazil could serve as a good

example (Figure 8) with few fluctuations

during the years. India (Figure 9) differs a lot

compared to the rest of the BRICS countries.

Political globalisation shows a permanent

trend to increase while the growth rate for

the rest of the factors is almost flat. There is

a substantial rise in cultural proximity in

1995 but personal contact didn’t change

during the analysed period. Regarding South

Africa (Figure 10) a sharp improvement in

cultural proximity in 1994 is seen and a

steady growth of political globalisation after

1994. Information flows and social

globalisation are raising as well.

Comparing BRICS country profiles for

2011, it is evident that all countries are at the

305B.Vassileva / SJM 11 (2) (2016) 291 - 310

Figure 12. Comparative analysis of BRICS countries by personal contact and cultural proximity,1970 - 2011

Figure 11. Comparative country profiles by KOF Index variables, 2011

same (almost maximum) level for political

globalisation. Regarding cultural proximity

and personal contact, the following

subdivision can be done. China and Russia

share the same level (around 80) of cultural

proximity while the value of this index

component for India, Brazil and South Africa

fluctuates around 40. As for the personal

contact, South Africa and Russia differ

substantially from the rest (Brazil, India, and

China). Some additional analysis is

performed about those two elements of the

KOF Index of Globalisation. Data are

analysed through data mart software. The

visualisation of the results is presented on

Figure 12.

The correlation pattern between cultural

proximity and personal contact is linear for

Brazil, Russia, and China. It is almost

identical for Brazil and Russia. These

differences can be explained by cross-

cultural variances between BRICS countries

(Figure 13).

Russia and China are quite similar on

Power Distance, Indulgence, and Long Term

Orientation dimensions. Power Distance

deals with the fact that all individuals in

societies are not equal. Such countries are

quite centralised which increases macro risk

levels. The high score on Long Term

Orientation suggests that Russia and China

are definitely countries with a pragmatic

mindset, i.e. people in these countries show

an ability to adapt traditions easily to

changed conditions. This might have a

positive effect during turnkey project

negotiation and contracting (tender

procedure step 3.1). Russia and China are

‘restrained’ cultures according to the low

score on Indulgence dimension. Societies

with a low score in this dimension have a

tendency to cynicism and pessimism because

of the perception that human actions are

restrained by social norms.

Presented results explain the medium

country risk levels (Table 6) except Russia

and Brazil with higher levels of risk.

The most negative business climate

assessment is given to Russian Federation.

Itsexplanationis rooted in the following

characteristics of Russian economy: lack of

or shortcomings in infrastructure;

shortcomings in the education system or

incomplete education system which leads to

lack of qualified labour; bureaucracy and/or

corruption; demographic problems;

environmental problems.

306 B.Vassileva / SJM 11 (2) (2016) 291 - 310

Note: Data were extracted from https://geert-hofstede.com [last access on: 2 July 2016]

Figure 13. Comparative profiles of BRICS countries by Hofstede cultural dimensions

4. CONCLUSIONS AND

IMPLICATIONS FOR FUTURE

RESEARCH

Global markets are constantly evolving.

Companies are facing a growing number of

both market challenges and business

opportunities. Despite the phenomenon of

globalisation and deregulation of markets the

risk levels of entering foreign markets are

still high. To avoid excessive market failures

firms should carefully analyse foreign

market environment before the choice of

international market entry mode. This is

especially critical for emerging markets. In

such situations contractual entry modes are

preferable especially for large projects.

Turnkey projects provide an opportunity to

enter a foreign market by adapting to the

complexity of the environment or even by

proactively modifying it.

Several implications for future research

were identified.

First, it is interesting to be explored

further if the process of turnkey projects

development could be used by investors in

emerging markets for long-term purposes

and especially for further market expansion

thus overcoming the discontinuity of project

business.

Second, in order to support marketing

managers for their strategic market decisions

it would be noteworthy to investigate the

opportunities for transforming the process of

turnkey projects development into profitable

business solutions based on networks

between investor, suppliers, consultants and

other business and non-business actors.

Third, an interesting topic for future

research provides the evolution of

information technologies and its effect on

market entry modes.

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